Mumbai, July 07: Standard Chartered Bank has struck an on-shore foreign currency option transaction with Reliance Industries Ltd (RIL) for USD 30 million, allowing RIL to hedge its USD exposure. The deal, executed with RIL for USD 30 million has a tenor of six months, Standard Chartered Bank said in a release here today.
Such deals involve taking a cover for changes in the value of foreign currency against the Indian Rupee (INR).

The client buys a "USD put INR call" option to hedge the risk on the downside and gives up some potential gains by selling a "USD call INR put" option to obtain a zero cost combination, the release said.

This specific structure was suitable to exporters, who need to sell forward Dollars and hold a view that INR would appreciate against USD in the next six months, the release added.

The foreign currency option would provide onshore customers with genuine foreign currency exposures, greater hedging flexibility as compared to the forward cover, it said.


As part of developing derivative market in India, Reserve Bank of India has permitted foreign currency-rupee options with effect from today.
Bureau Report